Afternoon Coffee: Upwork’s Q3 financials show progress; Toptal launches; Soybeans under fire; China agrees to cancel tariffs in phases


China's Commerce Ministry has said China and the U.S. have consented to scrap the tariffs imposed in the on-going trade war, but in phases, according to Reuters.

Without specifying a timetable, Ministry spokesman Gao Feng said tariff revocation was an important condition for any agreement. An interim U.S.-China trade deal is now expected to include a U.S. pledge to scrap tariffs scheduled for Dec. 15.

AC Spotlight: Upwork’s Q3 2019 financials are promising

Upwork Inc., the largest online talent solution based on GSV (gross services volume), reported its Q3 2019 financial information Tuesday. Results across the board were positive, as the public company continues to execute on key initiatives, perhaps most notably its market segmentation and product tiers (Upwork Basic, Upwork Plus, Upwork Business and Upwork Enterprise) along with its ongoing growth in its salesforce mainly focused on Business and Enterprise (65 new account reps were added in the third quarter).

Despite these signs of progress, the market was disappointed with the results report, with the share price dropping by more than 20% in morning trading today, with a high volume of shares changing hands.

Some key Q3 2019 financial results were:

  • GSV grew 20% year-over-year to $537.5 million
  • Revenue grew 23% year-over-year to $78 million
  • Gross profit grew by 29% year-over-year to $56.3 million
  • Gross margin for the quarter was 71%, up 68% year-over-year
  • Net loss shrunk to $(2.8) million in the quarter vs. a loss of $(7.3) million in Q3 2018
  • Adjusted EBITDA in the quarter $2.7 million vs. a loss of $(0.1) million in Q3 2018

These improvements in bottom line occurred even as Q3 2019 expenses for R&D, Sales and Marketing and GA increased 29% over Q3 2018.

Upwork’s President and CEO, Stephane Kasriel, was quoted as saying: “We had a successful third quarter and exceeded our revenue and adjusted EBITDA guidance. Our enterprise strategy is setting us up to address a sizable market opportunity and is showing signs of success. We've made investments in enterprise sales, marketing and product to better address the needs of staffing buyers, and results show it.”

Kasriel also said that Upwork Business and Enterprise sales are on track to drive 20% of incremental revenue in 2019, with those two offerings registering client spend retention above 125% (overall Upwork client spend retention was 104%).

At the time of publication, Upwork shares were trading at around $12.25, compared to yesterday’s trading that opened at $15.21 and closed at $15.03. And the high volume of trades in the morning has since tapered off.

Spend Matters will be taking a closer look at these results to weigh whether further analysis and commentary are needed.

Toptal launches

Talent network Toptal announced “the launch of to foster conversations pertaining to technologies that are increasing the efficiency of staffing, the rise of remote work, the expansion of the freelance economy, and the future of procurement and staffing at large enterprises,” according to the press release. Learn more details by reading the full release here.

Amazon plans $40 million robotics innovation hub

Amazon is planning a state-of-the-art facility in Massachusetts. The 350,000-square-foot robotics innovation hub will come with a price tag of $40 million, and will add 200 technology and advanced manufacturing jobs when it opens in 2021, according to TechCrunch.

U.S. soybean cargo caught in duty crossfire

A shipment of U.S. soybeans was offloaded in China following a dispute between the buyer and customs officials over duty payment. Reuters reported that the cargo was booked by the state-owned Jiusan Group thinking it would be exempt from tariffs. But sources told the news agency that after about a one-week delay due to the dispute, it was currently sitting in port in northeastern China after customs demanded payment of the 33-percent duties on the soybeans.

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